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  • Asia Pacific/Middle East/Africa Copyright 2005, Dr. Peter Yannopoulos
  • 15 globalization

    1. 1. Midterm #2 Report Average: C01-38/60, C02 – 40/60r e b m Nt nedut S u Correct Answer Number (out of 60)
    2. 2. Midterm #2 Question ReviewQuestion # 48. Brand extension require:•Brand Extension•Product Line Extension•Trading Up/Down•Supply Chain Extension
    3. 3. Brand Extension and Top Valuable BrandsBrand Extension:Extend current brand to completelydifferent product class/categoryhttp://en.wikipedia.org/wiki/Product_lining Source: http://www.interbrand.com/en/best-global-brands
    4. 4. Product Line Extension vs. Trading Up/Down Product Line Extension: Trading Up/Down: Add a new product to a product line, Market Segmentation extension. or add new product category with Add a line extension that is of different brands better/lower quality. http://en.wikipedia.org/wiki/Product_lining www.google.com/image
    5. 5. Supply Chain Extension /Stretching Supply Chain Extension: Business expansion along supply chain. http://en.wikipedia.org/wiki/Product_lining www.google.com/image
    6. 6. One Week Ahead RemindingOn November 30th :•On line forum will be closed•Team Project Report Due•Team Peer Evaluation Due•Last date to submit all bonus assignments &case studies
    7. 7. 7 Reaching Global Markets © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    8. 8. Agenda1. Economic Globalization • What, when, where, why • Pros & Cons1. International Marketing Strategies • Global Environment Scan (PEST) • Global Market Entry Strategies • International Marketing Mix3. Dynamics of World Trade • Trade Balance • Canada Prospective
    9. 9. 1. ECONOMIC GLOBALIZATIONA new reality: global competition amongglobal companies for global customers.Globalization happens on every stage onSupply Chain.
    10. 10. Boeing 787 Production NetworkThe final assembly for the Boeing 787 will take place at Boeing plant in Everett,Washington. http://bintang.site11.com/Boeing_787/Boeing787_files/Assembly.html
    11. 11. IPOD Production from MIT Media Lab documents the global supply chain of the things we use every day. www.wto.org1. Apple Engineers – CA, USA2. Flash Memory –South Korea3. HDD Input – Japan WTO Initiative to support free4. Other Parts - Taiwan trade and practical approaches in+. PCB Assemble & test – Shanghai measuring and analysing trade in IPOD Production – Shanghai value added.5. Apples Management – Singapore Handout -1 http://sourcemap.com/view/163
    12. 12. IPHONE Manufacturershttp://www.kmapple.com/news/skill/1480.html
    13. 13. MCDONALD WORLDWIDE http://www.bme.eu.com/news/mcdonalds-across-the-world/ http://www.bme.eu.com/news/mcdonalds-across-the-world/
    14. 14. MCDONALD WORLDWIDE SALESDollars in millions 2010 2009Company-operated sales: U.S. $ 4,229 $ 4,295Europe 6,932 6,721APMEA 4,297 3,714Other Countries & Corporate 775 729Total $16,233 $15,459 http://www.aboutmcdonalds.com/etc/medialib/aboutMcDonalds/investor_relations3.Par.56096.File.dat/2010%20Annual %20Report%20%28print%29.pdf
    15. 15. BUSINESS 1  Founded in 2000 Electronics OEM  10 SMT Production Line  300 trained employees
    16. 16. World Largest Consumer Market2010 world top 3 luxury consumer markets:•Japan•China•the United States Handout -2http://www.mckinsey.com/mgi/publications/india_consumer_market/slideshow/main.asp
    17. 17. http://www.ln.chinanews.com/html/2011-05-06/212336_2.html
    18. 18. GLOBALIZATION Causes - • Outsourcing products to cheaper global suppliers • Relocating production to more efficient sources • Offering products to a larger market • Investing in different economies for higher returns • Realized by IT and transportation development  Containerization  The largest US importer, Wal-Mart, shipped over 575,000 TEUs of cargo in 2004, or over 11,000 TEUs per week. http://www.tc.gc.ca/eng/policy/report-acg-containers2006-c3-219.htm
    19. 19. “THE WORLD IS FLAT” vs. “THE WORLD IS NOT FLAT”  Pros • increased income, employment • growth of the global economy  Cons • income inequality increased • Human trafficking (such as child labour) increased • Environment cost http://www.disinfo.com/2011/06/why-the-world-isnt-as-flat-as-thomas-friedman-says/
    20. 20. CASE STUDY – CNS Breathe Right® Strip1. What are the opportunities/impediments ofCNS taking its Breathe Right® strip intointernational markets?2. Which marketing mix variables (4Ps) should CNSemphasize the most to succeed in a global arena?
    21. 21. 1. What are the opportunities/impediments of CNS taking its Breathe Right® strip into international markets?Opportunities: • Congestion problems are universal • “natural” products , non-drug nasal strip • innovative productImpediments: • “International” can’t be treated as one big market • Market strategy to fit local market is difficult, takes time and money to identify and implement • developing new packaging and advertising, educating potential consumers, and finding efficient distributors and channels can be costly.
    22. 22. 2. Which marketing mix variables (4Ps) should CNSemphasize the most to succeed in a global arena?•Product localized•Skimming price strategy.•Distribution is very important because of the differences inchannels and the implications it has for positioning.•Promotion, more specifically publicity, is also very importantbecause few consumers will know what the product is when it isfirst introduced.•CNS’s experience is that finding a strong partner is critical to itsultimate success in a country.
    23. 23. 2. INTERNATIONAL MARKETING STRATEGIES • Global Environment Scan (PEST) • Global Market Entry Strategies • International Marketing Mix
    24. 24. A GLOBAL ENVIRONMENTAL SCANPolitical-Regulatory Climate • Political Stability • Legal System • Trade Regulations PEST approach http://www.worldaudit.org/corruption.htm Handout -3 © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    25. 25. Economic Considerations • Stage of Economic Development • Economic Infrastructure • Consumer Income and Purchasing Power • Currency exchange ratesGDP RANK GDP PER CAPITA RANK Handout - 4
    26. 26. Porter’s Factor Conditions – 5 Capitals‣ Natural capital: land and sub-soil resources.‣ Human capital: labor, experience and skills‣ Intellectual capital: R&D, patents, brands‣ Physical capital: infrastructures, buildings‣ Social capital: reputations, political/legal system Canada – the best country for business Handout - 5 © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    27. 27. World Trade Organization • European Union – 1993,Single Market four freedoms of: movement of goods, services, people & money. • North American Free Trade Agreement(NAFTA): 1994 to eliminate barriers to trade and investment between the US, Canada and Mexico • World Trade Organization (WTO):1995  153 countries  Free trade through negotiation  Decline of economic protection • Tariffs • Quota FIGURE 7-3 How protectionismHandout - 6 affects world trade © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    28. 28. Social Environment ScanEvery place does business its own way. Cultural Diversity • Values • Customs • Language Business Practices • Relationships & Communication • Business Meeting Etiquette • Business Negotiating Etiquette • Gift Giving Etiquette • Dressing/Dining Etiquette http://www.kwintessential.co.uk/etiquette/doing-business-in.html
    29. 29. Deal-killing Faux Pas• Business card rituals • Do study carefully upon receiving • Don’t use as tooth pick, bend, shove in pocket w/o glance, scribble notes• It’s ok to act like a foreigner—within limits! • When to bow • When to speak English
    30. 30. GLOBAL MARKET-ENTER STRATEGYFIGURE 7-6 Alternative global market-entry strategies © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    31. 31. Examples of Contract-based International Business‣ Boeing & IPOD - Contractual Manufacturing (OEM, ODM)‣ FedEex-DTW joint ventures‣ Coca-Cola and its’ bottler-distributors‣ McDonalds and its restaurant franchises($175K franchise fee to operate a McDonalds restaurant) © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    32. 32. MULTINATIONALBusiness Strategy Multinational BUSINESS STRATEGYHome Country Foreign Country Home Centralization (Exporting) Replication Foreign Centralization (Importing) http://pptbusiness.net/levels-of-multinational-strategy.html http://pptbusiness.net/levels-of-multinational-strategy.html
    33. 33. Crafting a Worldwide Marketing Program• Product Strategy - Product adaptation• Price Strategy - Localized Price• Promotion Strategy• Distribution Strategy © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    34. 34. PRODUCT ADAPTATIONhttp://users.telenet.be/worldstandards/driving%20on%20the%20left.htm
    35. 35. Washing machinewith different features AC Power Plugs Handout - 7 http://www.gadgets-reviews.com/upcoming/29
    36. 36. Head-to-headPositioningInternationally © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    37. 37. WORLD MARKET CHALLENGE AND THE FUTURE • Population Growth and Poverty • Environmental Issues • Fair Trade • Governments’ Efforts • NGO • CSR
    38. 38. DYNAMICS OF WORLD TRADE ‣ Global Perspective ‣ Gross Domestic Product (GDP) ‣ Balance of Trade ‣ Canadian Perspective • The 11 largest exporter and 9 largest importer in the world, trade represents the lifeblood of the Canadian economy • It is responsible for as much as 67.6 percent of our gross domestic product (GDP) • Exports of goods and services are equivalent to about 30 percent of our economy (as measured by GDP)Handout - 8 http://www.international.gc.ca © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    39. 39. FIGURE 7-1 Illustrative world trade flows for manufacturedgoods and commodities (billions of dollars) © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    40. 40. Supplementary Slides
    41. 41. “the most famous Canadians in China” Have you heard of them? Mark RowswellNorman Bethune
    42. 42. Electronic Contract Manufacturing• EMS - Electronic manufacturing services is a term used for companies that design, test, manufacture, distribute, and provide return/repair services for electronic components and assemblies.• OEM-original equipment manufacturers• ODM-Original Design Manufacture http://en.wikipedia.org/wiki/Electronics_manufacturing_services
    43. 43. QUIZ & EXAM ZONE © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    44. 44. Concept CheckAmong which countries was the North American FreeTrade Agreement was designed to promote freetrade? Answer: The North American Free Trade Agreement (NAFTA), effective since 1994, lifted many trade barriers between Canada, the United States, and Mexico. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    45. 45. Concept CheckWhat is the difference between a multidomesticmarketing strategy an a global marketing strategy? Answer: Multidomestic marketing strategy is a multinational firms offering as many different product variations, brand names, and advertising programs as countries in which it does business. A global marketing strategy is the standardization of marketing activities when there are cultural similarities and adopting them when culture differ. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    46. 46. Concept CheckWhat variables influence why some companies andindustries in a country succeed globally while otherslose ground or fail? Answer: According to Michael Porter, they include: • Factor conditions, such as natural resources • Demand conditions • Related and supporting industries • Company strategy, structure and rivalry © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    47. 47. Concept CheckWhat is protectionism? Answer: Protectionism is the practice of shielding one or more sectors of a countrys economy from foreign competition through the use of tariffs or quotas. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    48. 48. Concept CheckSemiotics involves the study of: Answer: Cultural symbols and their role in the assignment of meaning for people. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    49. 49. Concept CheckWhat mode of entry could a company follow if it hasno previous experience in global marketing? Answer: Indirect exporting is ideal for the company that has no overseas contacts but wants to market abroad. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    50. 50. Concept CheckProducts may be sold globally in three ways. Whatare they? Answer: The three ways products may be sold globally are: (1) Product extension, (2) Product adaptation, and (3) Product invention. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    51. 51. Concept CheckWhat is dumping? Answer: Dumping is when a firm sells a product in a foreign country below its domestic price or below it actual cost. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    52. 52. Countertrade‣ Countertrade is the process of using barter rather than money for making global sales. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    53. 53. Trade Feedback Effect‣ The trade feedback effect is the phenomenon of imports affecting exports and vice versa. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    54. 54. Gross Domestic Product‣ The gross domestic product is the monetary value of all goods and services produced in a country during one year. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    55. 55. Balance of Trade‣ The difference between the monetary value of a nation’s exports and imports is called the balance of trade. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    56. 56. Protectionism‣ Protectionism is the practice of shielding one or more sectors of a country’s economy from foreign competition through the use of tariffs or quotas. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    57. 57. Tariffs‣ Tariffs are a government tax on goods and services entering a country. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    58. 58. Quota‣ A quota is a restriction placed on the amount of a product allowed to enter or leave a country. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    59. 59. Global Competition‣ Global competition exists when firms originate, produce, and market their products and services worldwide. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    60. 60. Strategic Alliances‣ Global strategic alliances are agreements among two or more independent firms to co-operate for the purpose of achieving common goals. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    61. 61. Multidomestic Marketing Strategy‣ Multinationals using a multidomestic marketing strategy have as many different product variations, brand names, and advertising programs as countries in which they do business. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    62. 62. Global Marketing Strategy‣ A global marketing strategy is the practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    63. 63. Global Consumers‣ Global consumers consist of customer groups living in many countries or regions of the world who have similar needs or seek similar features and benefits from products or services. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    64. 64. Cross-Cultural Analysis‣ A cross-cultural analysis involves the study of similarities and differences among consumers in two or more nations or societies. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    65. 65. Customs‣ Customs are the norms and expectations about the way people do things in a specific country. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    66. 66. Cultural Symbols‣ Cultural symbols are things that represent ideas and concepts. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    67. 67. Semiotics‣ Semiotics is concerned with the correspondence between symbols and their role in the assignment of meaning for people. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    68. 68. Back Translation‣ In back translation, a translated word or phrase is retranslated into the original language by a different interpreter. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    69. 69. Consumer Ethnocentrism‣ Consumer ethnocentrism is the tendency to believe that is inappropriate or immoral to purchase foreign- made products. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    70. 70. Currency Exchange Rate‣ A currency exchange rate is the price of one country’s currency expressed in terms of another country’s currency. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    71. 71. Exporting‣ Exporting is producing goods in one country and selling them in another. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    72. 72. Joint Venture‣ When a foreign company and a local firm invest to create a local business, it is called a joint venture. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    73. 73. Direct Investment‣ Direct Investment entails a domestic firm actually investing in and owning a foreign subsidiary or division. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    74. 74. Dumping‣ Dumping is when a firm sells a product in a foreign country below its domestic price or below its actual cost. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    75. 75. Grey Market‣ A grey market is a situation where products are sold through unauthorized channels of distribution. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    76. 76. Global Brand‣ A brand marketed under the same name in multiple countries with similar and centrally co-ordinated marketing programs. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.
    77. 77. Licensing‣ Offering the right to a trademark, patent, trade secret, or other similarly valued items of intellectual property in return for a royalty or a fee. © 2008 McGraw-Hill Ryerson Ltd. All rights reserved.

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